Karachi, July 17, 2024 – The Federal Board of Revenue (FBR) has officially announced the amended salary tax rates as enacted through the Finance Act, 2024. These revisions are set to take effect from July 1, 2024, and will be applicable for the tax year 2025.
According to sources within the FBR, the new tax rates target individuals whose income from salary constitutes more than 75 percent of their total taxable income. This strategic amendment aims to create a more structured and equitable taxation framework.
The revised tax rates are structured as follows:
• For individuals with a taxable income up to Rs. 600,000, the tax rate remains at 0%.
• For those earning between Rs. 600,001 and Rs. 1,200,000, a 5% tax is imposed on the amount exceeding Rs. 600,000.
• Individuals with taxable incomes between Rs. 1,200,001 and Rs. 2,200,000 will be taxed Rs. 30,000 plus 15% of the amount exceeding Rs. 1,200,000.
• For taxable incomes ranging from Rs. 2,200,001 to Rs. 3,200,000, the tax rate is set at Rs. 180,000 plus 25% of the amount exceeding Rs. 2,200,000.
• Those earning between Rs. 3,200,001 and Rs. 4,100,000 will face a tax rate of Rs. 430,000 plus 30% of the amount exceeding Rs. 3,200,000.
• For individuals with taxable incomes exceeding Rs. 4,100,000, the tax imposed is Rs. 700,000 plus 35% of the amount exceeding Rs. 4,100,000.
These changes are part of a broader initiative by the FBR to streamline tax collection and ensure a fair distribution of tax burdens. By targeting high-income earners and those with significant salary-based income, the government aims to enhance revenue collection while promoting economic equity.
Tax experts have noted that these amendments reflect the government’s ongoing efforts to reform the taxation system. The focus is on increasing compliance and reducing tax evasion, which has historically plagued the country’s fiscal structure. The updated tax rates are expected to bring in substantial revenue, which will be crucial for funding various development projects and public services.
The FBR has urged all taxpayers to familiarize themselves with the new rates and ensure timely compliance. Detailed guidelines and explanatory notes have been made available on the FBR’s official website to assist taxpayers in understanding and implementing these changes.
As the tax landscape continues to evolve, individuals and businesses are advised to stay informed and seek professional advice to navigate the complexities of the new taxation regime effectively. The implementation of these revised tax rates marks a significant step towards achieving a more balanced and efficient tax system in Pakistan.